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US Housing Market Increase, But Slowing Down

US house prices increased rapidly in June. One monthly purchase price index from the Federal Housing Finance Agency increased by 0.2 per cent sequentially and 4.8 per cent year on year after an updated figure of 0.2 per cent in May.

Meanwhile, the 20-city composite from S & P / Case-Shillar increased sequentially by just 0.04 per cent in June following a 0.13 per cent rise in May. The monthly increases in both measures were slightly below expectations.

“With today’s estimates, house prices are rising at their slowest pace since 2012, when the crisis in housing crisis has continued to lag behind many local markets”, Barclays mentioned in a research report.

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House prices have been steadily decelerating since the beginning of 2018. This slowdown may be part of a wider weakening of the housing market affecting activity measures such as residential construction and home sales.

Housing activity is expected to bring a high-level program this year, rather than to decline further. This reflects the view that affordability in the home should return to the majority of households, and that further acceleration in family income which impacts on gains will be underpinned by wage density and early labor markets.

“This improvement should be reinforced with mortgage interest rates, which have been significantly deteriorated this year and are expected to succeed in Fed. However, with the limited supply of new units coming onto the market, supply and demand for housing appears to be finely matched, reducing the likelihood of a sharp correction in house prices ”, added by Barclays.

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